Could the RBA raise interest rates this year?

According to the ABS, the seasonally adjusted unemployment rate of 4.2% in December is the lowest the country has seen since August 2008.

Dr Andrew Wilson, consultant economist at Bluestone Home Loans, said the numbers did not necessarily reflect a stable economic trajectory.

“The low rate unsurprisingly fueled the usual suspects’ predictions of a surge in wage growth fueling higher inflation and leading to RBA interest rate hikes this year,” Dr Wilson said.

“The national result however was again significantly impacted by the recoveries of NSW and VIC from the severe COVID lockdowns of the previous months,” he noted.

According to Dr Wilson, the short-term outlook for the national labor market is anything but certain, as self-imposed voluntary lockdowns in the face of the surge in Omicron cases are likely to impact economic performance at the very least. during this quarter.

“Under these circumstances, employment will likely decline and unemployment rates will rise as the roller coaster of COVID continues,” he predicted.

In its latest statement, the RBA said it intended not to raise rates until national wage growth was “significantly higher than it is now”.

“It will likely take some time and the council is prepared to be patient,” the statement added.

In light of this position and the current economic environment, Dr Wilson said that “the forecast for official interest rate hikes as early as August is clearly absurd”.

For now, the RBA’s current rate hike outlook remains at 2024, which Real Estate Institute of Australia (REIA) Chairman Hayden Groves said was supported by the latest price indices to ABS consumption.

With CPI for all groups rising 1.3% for the December quarter and 3.5% for the year, Groves said the figures pointed to relatively stable monetary parameters for the rest of 2022.

“Although the rise in analytical series is the highest in more than six years, it remains within the RBA’s long-term target rate of 2-3%.”

“This suggests there won’t be any immediate interest rate pressures,” Groves said.

But many are still looking to countries like New Zealand, where a rate hike was delayed in August 2021 before being handed down as scheduled in October and November, as a flag for Australia.

Peter Rose, Chief Revenue Officer of Forbury, commented on REB that the similar economic conditions and inflationary pressures each country faced made it reasonable to expect Australia to follow suit.

He also predicted that a rate hike could rattle the Australian property market in a number of ways, with investors potentially more likely to price their portfolios, bringing stocks to market, as low-cost lending declines.

Australians were assured, however, that the effect of RBA and APRA policies on housing affordability will be closely watched throughout 2022.

Speaking at a press conference in December, Treasurer Josh Frydenberg said the topic was “a discussion I will continue to have with our prudential regulator APRA, with Phil Lowe as Reserve Bank Governor, in my discussions with them, because I do want to make sure that we continue to welcome Australians into a home”.



Interest is the amount of money charged by a lender or financial institution for a loan, which is calculated as the percentage of the principal amount paid over the term of the loan.

About the Author

Juliet Helmke

Based in Sydney, Juliet Helmke has extensive reporting and writing experience in business, technology, entertainment and the arts. She was previously an editor at the New York… Read More

Could the RBA raise interest rates this year?

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Last update: January 28, 2022

Posted: January 29, 2022